Overall Index Pulled Down By High-End Segment

• National rent growth decelerated in July 2017 compared with July 2016
• Low-end rent growth was more than double high-end rent growth
• Phoenix had the highest year-over-year rent growth in July

Single-family rents, as measured by the CoreLogic Single-Family Rental Index (SFRI), climbed steadily between 2010 and 2016. However, the index shows year-over-year rent growth has decelerated slowly (Figure 1) since February 2016, when it peaked at 4.4 percent. In July 2017, single-family rents increased 2.9 percent year over year, a 1.5 percentage point decline since the growth rate peaked at 4.4 percent in February 2016. The index measures rent changes among single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time.

Using the index to analyze specific price tiers reveals important differences. Figure 1 shows that the index’s overall growth in July 2017 was pulled down by the high-end rental market, defined as properties with rents 125 percent or more of a region’s median rent. Rents on higher-priced rental homes increased 2.1 percent year over year in July 2017, down from a gain of 2.8 percent in July 2016. Rents in the low-end market, defined as properties with rents less than 75 percent of the regional median rent, increased 4.5 percent year over year in July 2017, down from a gain of 5.4 percent in July 2016.

Rent growth varies significantly across metro areas[1]. Figure 2 shows the year-over-year change in the rental index for 20 large metro areas in July 2017. 

Metro areas with limited new construction and strong local economies that attract new employees tend to have low rental vacancy rates and stronger rent growth. Phoenix experienced 4.4 percent year-over-year rent growth in July 2017, driven by employment growth of 2.9 percent year over year, which more was more than double national growth of 1.3 percent. In contrast, Houston, which has been hit with energy-related job losses since early 2015, experienced a 1.1 percent year-over-year decrease in rents, according to CoreLogic data.

^[1] Metro areas used in this report are Core Based Statistical Areas. The SFRI is computed for 75 CBSAs.

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